Yankee Construction agreed to lease payments of $762.79 on construction equipment to be
made at the end of each month for six years. Financing is at 15% compounded monthly.
a) What is the value of the original lease contract?
b) If, due to delays, the first eight payments were deferred, how much money would be
needed after nine months to bring the lease payments up to date?
c) How much money would be required to pay off the lease after nine months?
d) If the lease were paid off after nine months, what would the total interest be?
e) How much of the total interest would be due to deferring the first eight payments?
Question 2
Mr. and Mrs. Fox have each contributed $1825.00 per year for the last eight years into
RRSP accounts earning 6.93% compounded annually. Suppose they leave their
accumulated contributions for another five years in the RRSP at the same rate of interest.
a) How much will Mr. and Mrs. Fox have in total in their RRSP accounts?
b) How much did the Fox's contribute?
c) How much will be interest?
Question 3
A real estate developer bought land for $170 000.00 down and monthly payments of $10
450.00 for 5 years. What is the equivalent cash price if money is worth 7.75% compounded
semi-annually?
Question 4
What semi-annual payment must be made into a fund at the beginning of every six months
to accumulate to $4800.00 in ten years at 7% compounded semi-annually?
Question 5
Payments of $500.00 are made at the beginning of each month for four years. The interest
rate is 4.5% compounded monthly. If no further deposits are made
a) Calculate the accumulated value twelve years after the first deposit.
b) Calculate the amount deposited.
c) Calculate the interest.
Question 6
Jessica bought a bedroom suite on credit, signing an installment contract with a finance
company that requires monthly payments of $100.00 for 5 years. The first payment is made
on the date of signing and interest is 24% compounded monthly.
a) What was the cash price?
b) How much will Tricia pay in total?
c) How much of what she pays will be interest?
Question 7
Determine the future value and the present value of monthly payments of $173.00 each for
six years at 6.48% compounded monthly if
a) the payments form an annuity due;
b) the payments form an ordinary annuity